Bond Yield To Maturity (YTM) Definition

 

A bond's "Yield To Maturity" (YTM) is the annualized ROI yield from all interest payouts plus the returned principal at maturity, converted to an effective rate for the compounding period based on the coupon payment frequency.  This calculation assumes all coupon interest payments are received on schedule, and 100% of the face value is returned on the maturity date.

 

"PeriodsPerYear" is how many coupons are paid in a year.  For example, an investment with bond interest that pays twice a year will have a PeriodsPerYear = 2.

 

For bonds that have their payment frequency set to "At Maturity", Fund Manager assumes a PeriodsPerYear compounding period of 2 when calculating the Yield To Maturity.  If you would like to convert from YTM back to ROI, you can use this equation:

 

 

Tip: For Zero Coupon Bonds that redeem at face value, set the Coupon Rate to 0% and the Payment Frequency to the desired accrual period for YTM and Accretion calculations.

See Also

Bond Summary Report

Bond Income Style Properties

Bond Accretion and Amortization

Custom Report

ROI yield

 


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